Law of contract- Exclusion causes and privity Case Study

Law of contract- Exclusion causes and privity - Case Study Example Failure to meet such obligations, they will be liable for any damage. Such liability is strictly for the parties involved in a contract in exclusion to any third parties. The privity doctrine therefore stipulates that only the parties in a given contract can sue or be sued regarding the contract. This gives two different principles that can be derived from the doctrine. One is that any person or entity who is not a party in the contract does not have rights to enforce the contract and also that such a person is not bound by a contract in which he is not a party. It confers no rights or obligations to any except those engaged in a contract through agreement (Treitel, 1995). Economic development and growth in international trade has led to globalization in trade and given rise to legal conventions. In most business contracts most single contractors make arrangement with third parties who benefit from such contracts the growth of such contracts has increased calling for law reforms in many countries. With the growth of economies, the doctrine of privity, which prohibits conferment of contracts benefit to third parties raises a number of complexity to contracts which are made with the intention to benefit a third party. It frustrates such contracting parties while a third party who may have arranged with the contracting party in a contract suffers losses and ends up inconvenienced. In the case of the contract in question there are two parties in the contract, namely; Ace Steamers Ltd and Beth. In this contract, Beth entered into a contract with AC Steamers Ltd and bought two tickets, one for her daughter Carol and one for herself. Applying the doctrine of privity in this case, though Carol is bought for the ticket, she is not a party in the given contract and can not sue AC Steamers Ltd for any breach. She is also not liable for any damage that may be done by Beth. In this case we realize that Beth's intention was to benefit Carol and we clearly see some of the difficulties raised by the doctrine of privity. The case of Dunlop Pneumatic tyre Co Ltd versus Selfridge and Company is a classic example where Dunlop Pneumatic tires Co Ltd sold tyres to Selfridge and Co Ltd on condition that they would sell the tires below the greed price. Selfridge went on and sold to a third party based on the same conditions but the third party went on and sold the tyres below the price agreed and Dunlop Pneumatic sued them for a breach and the case was ruled that there was no contract between the third buyer and Dunlop Pneumatic Co Ltd. In the case in question Carol has no right of action against the Ac Steamers Co Ltd. However Beth being a party in the contract can sue for damages that herself has incurred. There are a few exceptions to the doctrine of privity which comprise means of circumventing the doctrine of privity. Under insurance contracts the doctrine of privity excepted in insurance policies for the advantage of third parties such that a policy is effected by the assured for his life, and also expressed as benefit of his dependants such that she can sue in the particular insurance company as long as it's assigned in writing. The doctrine of privity also faces exception in matters of family development and marriage settlements, where a contract is an arrangement on marriage